economic survey 2017-18 volume 1 preface · chapter no. page no. name of the chapter v...
TRANSCRIPT
EconomicSurvey 2017-18
Volume I
Government of IndiaMinistry of Finance
Department of Economic AffairsEconomic Division
January, 2018
CONTENTS
Chapter No. Page No. Name of the Chapter
v Acknowledgement
vii Preface
ix Abbreviations
xiii Ten New Facts on the Indian Economy
1 State of the Economy: An Analytical Overview and Outlook for Policy
1 Overview: Short Term
3 Overview: The Medium Term
11 Recent Developments
18 Outlook for 2017-18
25 Outlook for 2018-19
2 A New, Exciting Bird’s-Eye View of the Indian Economy Through the GST
32 Introduction
33 Taxpayers
34 Tax Base and its Spatial Distribution
35 Size Distribution of Inter-Firm Transactions
37 International Trade, Inter-State Trade and Economic Prosperity
39 Trading Superstars: Indian Export Egalitarian Exceptionalism
40 Informality of the Indian Economy
42 Conclusion
3 Investment and Saving Slowdowns and Recoveries: Cross-Country Insights for India
43 Introduction
45 Identifying Investment and Saving Slowdowns
48 Saving versus Investment: Growth Consequences
51 Recovery from “India-Type” Investment slowdowns
53 Conclusions: Policy Lessons for India
4 Reconciling Fiscal Federalism and Accountability: Is there a Low Equilibrium Trap
55 Introduction
59 Local Governments: What do we know?
63 State and Local Governments: Posing an entirely different question
65 Conclusion: A Low Equilibrium Trap?
5 Is there a “Late Converger Stall” in Economic Development? Can India Escape it?
68 Introduction
70 The But…
71 The Four Headwinds (“Horsemen”)
80 Lessons for India
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6 Climate, Climate Change, and Agriculture
82 Introduction
86 Temporal and Spatial Patterns of Temperature and Precipitation
89 Impact of Weather on Agricultural Productivity
94 Impact on Farm Revenue
96 Conclusions and Policy Implications
7 Gender and Son Meta-Preference: Is Development Itself an Antidote
102 Introduction
105 India and Other Countries
110 Performance of the Indian States
111 Son Preference: Skewed Sex Ratio at Birth (SRB)
113 Son “Meta-Preference”: Sex Ratio of Last Child (SRLC) and “Unwanted” Girls
116 Conclusion
8 Transforming Science and Technology in India
119 Why Science
120 Inputs and Outputs: Some Evidence
124 Outputs
126 Expanding R&D in India: The Way Forward
9 Ease of Doing Business’ Next Frontier: Timely Justice
131 Introduction
132 Pendency and Delay: Facts
134 Pendency and Delay: Possible Reasons
136 Pendency and Delay: Costs
137 Central Government Taxes: A Case Study
140 Expenditure on Administration of Justice
140 Policy Implications
Annexures
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Acknowledgements
The Economic Survey is a result of teamwork and collaboration. Contributions to the Survey from the Economic Division and
Office of CEA include: Archana Mathur, Sanjeev Sanyal, H.A.C. Prasad, A. S. Sachdeva, Rajasree Ray, Arun Kumar, Antony Cyriac, P.K. Abdul Kareem, Ashwini lal, Ashutosh Raravikar, Nikhila Menon, Abhishek Acharya, Rajani Ranjan, Dharmendra Kumar, Aakanksha Arora, Rabi Ranjan, Dipak Kumar Das, M. Rahul, Abhishek Anand, Kanika Wadhawan, Sonal Ramesh, Khayi Leishingham, Gaurav Katiyar, Neeraj Srivastava, Vijay Kumar Mann, Riyaz Ahmad Khan, Salam Shyamsunder Singh, Md. Aftab Alam, Pradyut Kumar Pyne, Narendra Jena, Parveen Jain, Subhash Chand, Rajesh Sharma, Amit Kumar Kesarwani, Mritunjay Kumar, Rangeet Ghosh, Kapil Patidar, Syed Zubair Husain Noqvi, Rohit Lamba, Siddharth Eapen George, Sutirtha Roy, Shoumitro Chatterjee, Sid Ravinutala, Amrit Amirapu, M R Sharan, Parth Khare, Boban Paul, Gayathri Ganesh, Kishan Shah, Tejaswi Velayudhan, Ananya Kotia, Utkarsh Saxena, Siddharth Hari, Navneeraj Sharma and Rohit Chandra.
The Survey has benefitted from the comments and insights of the Hon’ble Finance Minister Shri Arun Jaitley. The Survey sincerely acknowledges the comments and inputs from other Hon’ble Ministers including Shri Suresh Prabhu, Shri Nitin Gadkari, Shri Ravi Shankar Prasad, Shri Dharmendra Pradhan, Shri Piyush Goyal, Shri Radha Mohan Singh, Shri Prakash
Javadekar, Shri RK Singh, Shri Jayant Sinha and the Hon’ble Ministers of State for Finance-- Shri P Radhakrishnan and Shri Shiv Pratap Shukla. The Survey also benefitted from insights of Hon’ble Ministers of State Governments including Shri Sushil Modi, Shri Haseeb Drabu, Shri T M Thomas Isaac, Shri Manish Sisodia, Shri Yudhvir Singh Malik, Shri Kailash Gahlot, Shri Yunus Khan, Shri K. L. Pawar, and Shri Swatantra Dev Singh.
The Survey benefited from the comments and inputs from officials, specifically N K Singh, Rajiv Kumar, Ajay Tyagi, P K Sinha, Nripendra Misra, P K Mishra, Hasmukh Adhia, Subhash C. Garg, Ajay Narayan Jha, Rajiv Kumar, Arvind Mehta, Rajiv Mehrishi, Viral Acharya, Bibek Debroy, Ramesh Chand, Pronab Sen, TCA Anant, Surjit Bhalla, Rathin Roy, Ashima Goyal, Ratan Watal, Amitabh Kant, Aruna Sundararajan, Susheel Kumar, Vanaja N Sarna, Arun Kumar, Durga Shanker Mishra, Preeti Sudan, U P Singh, Injeti Srinivas, C. K. Mishra, Amarjeet Sinha, Parameswaran Iyer, Rajiv Nayan Choubey, Kapil Dev Tripathi, Shobhana K Pattanayak, Ajay Kumar Bhalla, Aruna Sharma, Rita A Teaotia, Jitendra Shankar Mathur, Ashwani Lohani, Ajay Bhushan Pandey, Rajeevan, K J Ramesh, Arbind Modi, Gopal Krishna, T R Raghunandan, Nagesh Singh, Alok Srivastava, Vijay Raghavan, Ram Sevak Sharma,Vijay Kelkar, Y V Reddy, Montek Singh Ahluwalia, Isher J Ahluwalia, K L Prasad, Anthony Lianzuala, Ranjeeta Dubey, T V Somanathan, Prakash Kumar, A. Giridhar, Tarun Bajaj, Simanchala Dash, Saurabh Shukla, Debashree Mukherjee, Brijendra Navnit, S P Singh Parihar, Jyotirmoy Poddar, Ashutosh Sharma, Akhil Kumar, Ashutosh Jindal, U. K. Srivastava, Shailendra Kumar Mishra, K. P. Krishnan, M S Sahoo, Nilendu Mishra, Anand Jha, Alok Shukla, Amitabh Kumar, Gulzar Natarajan, T Rajeswari, Prashant Goyal, S Selvakumar, Govind Mohan, Sanjeev Sinha, Amit Mohan Govil, G. D. Lohani, Sanjeeb Patjoshi, K V Pratap, Praveen Garg, Ashutosh Jindal, Urvashi Sadhwani, B K Sinha, U S Kumawat, RK Jain, Dipankar Saha, Anuradha Mitra, Raj Pal, P Sangeeth Kumar, PR Meshram, Nand Lal, SK Sinha, Piyush Kumar, SK Tiwary, Yashvir Singh, Arun Kumar, Vandana Aggarwal, Vyasan R, P K Swain, B N Prusti, Venkatramana R Hegde, Renuka Kumar, Mohit Saxena, Pally Kundu, H. K. Roy, Rajneesh, Shailendra Sharma, Sunil Sharma, Ashwini Kumar, Mahima, Manoj R S, Prasanth V Regy, Rajesh Wadhawan, Pawan Kumar, V Krishnan, Gopal Raman Iyengar, Brahm Yadav, Sivananda Pai, Pulak Guhathakurta, Arvind Srivastava, Rahul Saxena, Mahendra Purohit, Gargi and
Preetish Kumar Tripathi, R Sathish, Bailochan Behera, Shobeendra Akkayi, Swati Agarwal, Abhishant Pant, Vijay Kumar, Sushmita Dasgupta, Rajesh Bhatia, Pramod Kumar, David Rasquinha, S. Prahalathan Iyer, Ashish Kumar, Ashish Gupta, Ashwani Gupta, Sarika Madan, Sreejith K B, Neha Srivastava, Shailesh Kumar, Nikita Garg, Anshika Bhatnagar, Sushant Sudan, Neeraj Kumar Sharma, Shalaka Kujur, P.K.Srivastava, V.S. Sehrawat, Arvind Pandey, J Poddar, Gayatri Bhattacharya, Sudipta Bhattacharya, Bipad Bhanjan Pal, Arun Vishnu Kumar, Kaustav, Rajeev Jain, Soumasree Tewari, Madhuchhanda Sahoo.
The Economic Survey team extends its gratitude to The Supreme Court of India, High Courts of Delhi, Bombay, Madras,
Calcutta and Allahabad, Income Tax Appellate Tribunals (ITAT), National Green Tribunals (NGT), National Consumer Disputes Redressal Commission (NCDRC), Appellate Tribunal for Electricity (APTEL), National Company Law Appellate Tribunal (NCLAT), Telecom Disputes Settlement and Appellate Tribunal (TDSAT), Intellectual Property Appellate Board (IPAB), Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Justice D K Jain, Justice Swatanter Kumar, Justice Ranjana Prakash Desai, Justice S J Mukhopadhyay, Justice Shiva Kirti Singh, Ravindra Maithani, G D Aggarwal, Sanjeev Kumar Chaswal, Sanjay Parihar, Thiru R. Sakthivel, Mohd. Faiz Alam Khan, P V Ganediwala, Sugata Majumdar, Dinesh Kumar, Y Vaidehi, D Kale, and Laishram Ladusingh.
(vi)
The Economic Survey team is also grateful for comments and inputs from numerous academics and practitioners: Lord
Nicholas Stern, Lord Adair Turner, Josh Felman, Justin Sandefur, Divyanshi Wadhwa, Rakesh Banerjee, Nandan Nilekani,
Seema Jayachandran, Rinku Murgai, Abhijit Banerjee, Esther Duflo, Frederico Gil Sander, Punam Gupta, Fabiano Silvio Colbano, Fabio Sola Bittar, Pratap Bhanu Mehta, Devesh Kapur, Devesh Roy, Ashok Gulati, Dipak Dasgupta, Ajay Mathur, Sandeep Sukhtankar, Harish Damodaran, Andreas Bauer, Nicholas Lardy, Ludger Schuknecht, Michael Pritzkow, Ranil M Salgado, Nimarjit Singh, Shekhar Shah, Rajat Kathuria, Amalendu Ghosh, Rukmini Banerjee, Michael Greenstone, Cort J Willmott, Fariha Kamal, Caroline Freund, Rohini Somanathan, Parikshit Ghosh, Himanshu, Pulak Ghosh, Mausumi Das, Kenji Matsuura, Arvind Datar, Manish Sabharwal, Siddharth Aggarwal, L Viswanathan, Serene Vaid, Rajeev Malhotra, Apoorva Javadekar, S M Vijayanand, Yamini Aiyar, Chinmay Tumbe, M A Oommen, Manoranjan Pattanayak, Mehul Gupta, Venkat Narayan S, Kshitij Batra, Swaroop Mamidipudi, Ragini Ahuja, Raghavi Viswanath, Rohan Dhariwal, Thejaswi Melarkode, Varsha Rao, Gokul Plaha, Devdutta Mukhopadhyay, Nirmal Mathew, Muizz Drabu, Anushka Mittal, Paridhi Srivastava, Karan Gupta, Madhav Kumar, Aman Gupta, Aditi Prakash, Nikhil Aggarwal, Praharsh Johorey, Shrey Patnaik, Daksh and its associates (Surya Prakash B. S., Ahmed Pathan, Harish Narasappa, Shruthi Naik), Sajjid Chinoy, Ashish Gupta, Neelkanth Mishra, Kush Shah, Pranjul Bhandari, Yamini Atmavilas, Joe Downie, Jack Harrild, Nisha Agrawal, Dev Patel, Charles Kenny, Nancy Birdsall, Charity Moore, Milan Vaishnav, Apoorva Jadhav, Ravi Verma, Shashi Dhara, Rajendra Bhatia, Alok Joshi, Soumyakanti Ghosh, Srikanth Vishwanathan, Marcus Brunnenmeier, Avani Kapoor, Kshitij Batra, Srikanth Viswanathan, Mahipal, Mihir Bhaskar, Aparna Krishnan, Braja Panda, G K Kishan, Mathangi Chandrasekhar, Anil Nair, Chetna Yogesh Verma, Rupali Ghanekar, Bishakha Bhattacharya, Nirmala Balakrishnan, V Rajan, Peeyush Pandey, Brig. R R Singh (retd.), Wilima Wadhwa and Savitri Devi.
Apart from the above, various ministries, departments and organisations of the Government of India made contributions in their respective sectors. Able administrative support was given by Anurag Agarwal, R P Puri, Debashish Halder, Vijay Kumar, N Srinivasan, R Vijaya Kumari, V K Premkumaran, Gurmeet Bhardwaj, Pradeep Rana, Sadhna Sharma, Jyoti Bahl, Sushil Sharma, Manish Panwar, Sushma, Muna Sah, Suresh Kumar, Aniket Singh, Jodh Singh, Puneet, Ombir Singh, R R Meena, Subash Chand, Raj Kumar and other staff and members of the Economic Division and the Office of CEA. R B Aniyeri, Suwarcha Vasudev and their team of translators along with Prof. B.S. Bagla carried out the Hindi translation. Hindi typing was done by Y.S. Rathor, Meena Pant, Ramesh Chand Sundriyal, Sanjay Prasad. The cover page for the Survey was designed by Jacob George of George Design, Kochi, assisted by Vineeth Kumar. Chandra Prabhu Offset Printing Works Pvt. Ltd., Noida undertook the printing of the English and Hindi version of the Survey.
Finally, the Economic Survey owes a huge debt of gratitude to the families of all those involved in its preparation for being
ever so patient and understanding and for extending their unflinching support and encouragement throughout the preparation.
Arvind Subramanian
(Chief Economic Adviser)
Ministry of Finance
Government of India
(vii)
Preface
The response to last year’s Economic Survey was overwhelming, humbling, and of course, burdening. According to behavioral
economics, humans place greater welfare weights on avoiding loss than experiencing equivalent gain. If true, the response to
last year’s Survey has created a heightened performance anxiety of falling short relative to higher expectations.
The other challenge doing this year’s Survey, the fourth of the current team and the last in the term of this government, is
avoiding the risk of jadedness. How can the Survey consistently maintain a freshness of approach, rigor of analysis, relevance
of material, and novelty of ideas?
Luckily, to the rescue comes the Indian economy with its infinite richness and complexity, throwing up limitless opportunities for investigation. Luckily too, economic policy over the past four years has been a crucible for many policy experiments that
cry out for understanding and analysis. Thankfully too, colleagues across government have been so generous with sharing data,
which has allowed ideas to be pursued so that new facts and evidence can find utterance.
In response to popular demand, we have this year reverted to the tradition of bringing out Volumes 1 and 2 at the same time. Volume 1 contains the analytical overview and more research-cum-analytical material. Volume 2 provides the more descriptive review of the current fiscal year, encompassing all the major sectors of the economy.
Without consciously pursuing an over-arching theme, a large part of Volume 1 focuses on what are perhaps more long-term challenges. So, in addition to the overview and chapters of contemporary relevance such as the GST, the investment-saving
slowdown, and fiscal federalism and accountability, there are five chapters devoted to challenges of long-term economic convergence, gender inequality, climate change and agriculture, delays in the appeals and judicial process, and science and technology.
As in last year’s Survey, Big Data has been mined to shed light on the economy, and, for the Survey’s authors, there have been
some truly “wow” moments of epiphanic understanding. For example, the implementation of the GST combined with
the availability of detailed new data from the Employees’ Provident Fund Organisation (EPFO) and the Employees’ State Insurance Corporation (ESIC) has allowed a whole new perspective to be gained into the Indian economy—its external and
internal trade in the aggregate and state-wise, the size and distribution of the tax net, and levels of formality and informality.
Similarly, spatially granular data on temperature and climate have been used to analyze the potential impact of climate change.
Household level data from the Demographic and health Survey (DHS) and the National Family Health Survey (NFHS) have underpinned the analysis of gender issues.
The color of this year's survey cover was chosen as a symbol of support for the growing movement to end violence against
women, which spans continents. Addressing the deep societal meta-preference in favor of sons, and empowering women
with education and reproductive and economic agency are critical challenges for the Indian economy addressed in Chapter 7.
Increasingly, a number of universities are adopting the Survey as a pedagogical tool for courses on the Indian economy. Inspired
by that, The Economic Division of the Ministry of Finance did a full-fledged Massive Open Online Course (MOOC) for students and teachers all across India with the help of the Ministry of Human Resources Development (MHRD). Hopefully,
those traditions can be built upon going forward even after these volumes.
As always, deep gratitude is owed to the staff of the Economic Division, whose heroic efforts have produced this Survey.
Their research, however, has only been possible because so many government colleagues provided their time, support, and
data. An indicative but far from exhaustive list would include colleagues from the Goods and Services Tax Network (GSTN); the Departments of Revenue, Bio-Sciences, Biotechnology, Science and Technology, Agriculture, and Women’s and Child Development; the Indian Meteorological Department (IMD); the EPFO; the ESIC; the various economic appellate tribunals; the Central Board of Excise and Customs (CBEC); the Central Board of Direct Taxes (CBDT); the State Bank of India (SBI); and National Sample Survey Office (NSSO).
The Survey strives to combine rigor with readability, a challenge that increases in the same proportion as attention spans shrink
(from absorbing op-eds to scrolling down tweets). The Survey’s aim is always to build a portfolio of contributions, combining
description, new data creation, deep-dive research, and provocative policy ideation.
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In addition to the entirely new perspective on the economy that the GST has provided, some of the many questions this Survey
discusses are: Can we expect the current investment slowdown to reverse quickly based on understanding other countries’ experience? Do second and third tier of governments collect the direct taxes that they are empowered to, and if not, what
does that signify? On gender, why should we focus on the sex ratio of the last child? Under what conditions, to what extent,
and where will the agricultural impact of climate change be most felt? Will there be a stall in India’s four decades long, dynamic process of economic convergence? Should the government and judiciary agree to a Cooperative Separation of Powers like the center and states do in the form of Cooperative Federalism to improve the conditions of doing business? Should there be a
number of science and technology missions to propel India to the ranks of the world’s top knowledge producers?
In addition to the many challenges involved in such an effort, all writers of the Survey must guard against the dangers of
staleness expressed by T.S. Eliot: “For last year’s words belong to last year’s language. And next year’s words await another voice.”
Arvind Subramanian
(Chief Economic Adviser)
Ministry of Finance
Government of India
(ix)
3MMA 3 Month Moving Average
AAY Antyodaya Anna YojanaARM Additional Resource Mobilization
ASEAN Association of South East Asian NationsASER Annual Status of Education Report
AT&C Aggregate Technical and Commercial
BCM Billion Cubic Meter
BE Budget Estimates
BPCL Bharat Petroleum Corporation Limited
BRICS Brazil, Russia, India, China and South
Africa
CAA&A Controller of Aid Accounts and Audit
CAD Current Account DeficitCAG Comptroller and Auditor General of India
CAGR Compound Annual Growth Rate
CBR Cultivated Biological Resources
CFPI Consumer Food Price Index
CGA Controller General of Accounts
CGST Central Goods and Services Tax
CIC Currency in Circulation
CIRP Corporate Insolvency Resolution Process
CLSS Credit Linked Subsidy Scheme
CoC Committee of Creditors
COP Conference of Parties
CPI Consumer Price Index
CPI (AL) Consumer Price Index (Agricultural
Labourers)
CPI (C) Consumer Price Index (Combined)
CPI (IW) Consumer Price Index (Industrial Workers)
CPI (RL) Consumer Price Index (Rural Labourers)
CRAR Capital to Risk-weighted Asset Ratio
CSA Climate Smart Agriculture
CSO Central Statistics OfficeCTA Customs Tariff Act
CV Coefficient of VariationCwP Currency with Public
DALYs Disability Adjusted Life Years DARE Department of Agricultural Research and
Education
DBT Direct Benefit TransferDBTL Direct Benefit Transfer of LPG DDA Doha Development Agenda
DGCI&S Directorate General of Commercial
Intelligence and Statistics
ABBREVIATIONS
DGFT Directorate General of Foreign Trade
DIPAM Department of Investment and public
Asset Management
DIPP Department of Industrial Policy and
Promotion
DISCOMS Distribution Companies
DSIR Department of Scientific & Industrial Research
DTA Domestic Tariff Area
EBRD European Bank for Reconstruction and
Development
EFTA European Free Trade Association
EIB European Investment Bank
e-NAM Electronic National Agriculture MarketEPCG Export Promotion on Capital Goods
ER&D Engineering R&D
ETF Exchange Traded Fund
EU European Union
EWRs Elected Women Representatives
FAO Food & Agriculture Organisation
FC Financial Creditor
FCI Food Corporation of India
FDI Foreign Direct Investment
FEEs Foreign Exchange Earnings
FFPI FAO Food Price Index
FII Foreign Institutional Investor
FIPB Foreign Investment Promotion Board
FTAs Foreign Tourist Arrivals
FTP Foreign Trade Policy
FY Financial Year
GCA Gross Cropped Area
GCC Gulf Cooperation Council
GCCA Grants for creation of capital assets
GCF Gross Capital Formation
GDP Gross Domestic Product
GFCE Government Final Consumption
Expenditure
GFCF Gross Fixed Capital Formation
GII Global Innovation Index
GNI Gross National IncomeGNPA Gross Non-Performing AdvancesGPI Gender Parity Index
GSDP Gross State Domestic Product
GST Goods and Services Tax
(x)
GSVA Gross State Value Added GT Gross Tonnage
GVA Gross Value AddedGW Gigawatt
HFCs Housing Finance Companies
HFCs Hydrofluorocarbons HPCL Hindustan Petroleum Corporation Limited
HPI Housing Price Index
HYVs High Yielding VarietiesIBC Insolvency and Bankruptcy Code
ICAR Indian Council of Agricultural Research
IGS The International Ground Station
IGST Integrated Goods and Services Tax
IMF International Monetary Fund
IPO Indian Patent OfficeIPP Intellectual Property Products
IPR Intellectual Property Rights
IPU Inter-Parliamentary Union
IRS Indian Remote Sensing
ISS Interest Subvention Scheme
IT-BPM Information Technology – Business
Process Management
ITC Input Tax Credit
KCC Kisan Credit CardKWh Kilowatt HourLAF Liquidity Adjustment Facility LEB Life Expectancy at Birth
LED Light-Emitting Diode
LEO Low Earth Orbit
LFPR Labour Force Participation Rate
LIC Life Insurance Corporation of India
LPG Liquefied Petroleum GasLPI Logistics Performance Index
M/o DWS Ministry of Drinking Water & Sanitation
M/o H&FW Ministry of Health & Family Welfare
M/oPR Ministry of Panchayati RajM0 Reserve Money
M3 Broad money
MC11 Eleventh Ministerial Conference
MDGs Millennium Development Goals
MEIS Merchandise Exports from India Scheme
MEP Minimum Export Price
MIG Middle Income Group
MIP Minimum Import Price
MLAs Member of Legislative Assemblies
MMR Maternal Mortality Ratio
MMT Million Metric Tonne
MMTPA Million Metric Tonnes Per Annum
MNEs Manufacturing Multinational Enterprises MoEFCC Ministry of Environment, Forest and
Climate Change
MPC Monetary Policy Committee
MSF Marginal Standing Facility
MSME Micro, Small & Medium Enterprises
MSP Minimum Support Price
MSS Market Stabilisation Scheme
MT Metric Tonne
MW Megawatt
NABARD National Bank for Agriculture and Rural Development
NAREDCO National Real Estate Development Council NAS National Accounts StatisticsNBFC Non-Banking Financial CompanyNBFCs Non-Banking Financial Companies NCDs Non-Convertible Debentures NCLT National Company Law Tribunal NCT National Capital TerritoryNCW National Commission for WomenNDTL Net Demand and Time LiabilitiesNFC Non Food CreditNFSA National Food Security ActNHA National Health AccountsNHB National Housing BankNHDP National Highways Development ProjectNICRA National Innovations on Climate Resilient
Agriculture
NITI National Institution for Transforming India NPAs Non-Performing Assets NSDC National Skill Development Council NSSO National Sample Survey OfficeODF Open Defecation Free
OMSS Open Market Sale Scheme
OoPE Out of Pocket Expenditure
P2P Peer to Peer
PA Provisional Actuals
PDS Public Distribution System
PE Private Equity
PFCE Private Final Consumption Expenditure
PL Personal Loan
PMAY Pradhan Mantri Awas Yojana PMFBY Pradhan Mantri Fasal Bima Yojana
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PMI Purchasing Manager’s IndexPMKSY Pradhan Mantri Krishi Sinchayee YojanaPOL Petroleum Oil and Lubricants
PoS Point of Sale
PPI Producer Price Index
PRIs Panchayati Raj InstitutionsPSB Public Sector Bank
PSBs Public Sector Banks
PSE Public Sector Enterprise
PSF Price Stabilization Fund
PTR Pupil Teacher Ratio
PVB Private Sector BankQFI Qualified Foreign InvestorR&D Research and Development
RBI Reserve Bank of India
RE Revised Estimates
REITs Real Estate Investment Trusts
RGI Registrar General of India
RMSA Rashtriya Madhyamik Shiksha Abhiyan
RoA Return on Assets
RoE Return on Equity
RRBs Regional Rural Banks
RRR Reverse Repo Rate
RSA Restructured Standard Advances
RTE Right to Education
SA Stressed Advances
SBM(G) Swachh Bharat Mission (Gramin)
SCB Scheduled Commercial Bank
SDG Sustainable Development Goal
SDGs Sustainable Development Goals
SDR Special Drawing Rights
SEBI Securities and Exchange Board of India
SEIS Services Exports from India Scheme
SGST State Goods and Services Tax
SHG Self Help Group
SLR Statutory Liquidity Ratio
SRR Seed Replacement Rate
SSA Sarva Shiksha Abhiyaan
SUUTI Specified Undertaking for Unit Trust of India
TAN Tax Deduction Account NumberTB Treasury Bill
TPDS Targeted Public Distribution System
TRAI Telecom Regulatory Authority of India
UDAY Ujjwal Discom Assurance YojnaUDISE Unified District Information System for
Education
ULBs Urban Local Bodies
UN United NationsUNCTAD United Nations Conference on Trade and
Development
UNDP United Nations Development ProgrammeUNESCO United Nations Educational, Scientific and
Cultural Organization
USD United States Dollar
USGS United States Geological Survey
UTs Union Territories
VGF Viability Gap FundingVRR Varietal Replacement RateWACR Weighted Average Call Rate
WPI Wholesale Price Index
WTO World Trade Organization
TEN NEW FACTS ON THE INDIAN
ECONOMY
1. There has been a large increase in registered indirect and direct taxpayers
− A 50 percent increase in unique indirect taxpayers under the GST compared with the pre-GST system (Figure 1A).
− Similarly, there has been an addition (over and above trend growth) of about 1.8 million in individual income tax filers since November 2016 (Figure 1B).
Figure 1A Figure 1B
0
1
2
3
4
5
6
7
New Unique GSTRegistrants
Old UniqueRegistrants
Regis
tratn
s in
milli
on
0
1
2
3
4
5
6
7
8
9
10
11
Nov. 2010-Nov. 2011
Nov. 2011-Nov. 2012
Nov. 2012-Nov. 2013
Nov. 2013-Nov. 2014
Nov. 2014-Nov. 2015
Nov. 2015-Nov. 2016
Nov. 2016-Nov. 2017
Additional 1.8 million taxpayers added post-Novemeber 2016 In
Millio
n
2. Formal non-agricultural payroll is much greater than believed
− More than 30 percent when formality is defined in terms of social security (EPFO/ESIC) provision;
− More than 50 percent when defined in terms of being in the GST net.
31
53
7.5
12.7
0
2
4
6
8
10
12
14
0
10
20
30
40
50
60
70
Defined by Social Security Defined by Tax Net
Emplo
yee i
n cro
re
% of
Non
-farm
emplo
ymen
t
% of Non-farm employment (LHS)Employees (crore, RHS)
xiv | Economic Survey 2017-18 Volume 1
3. States’ prosperity is correlated with their international and inter-state trade
States that export more internationally, and trade more with other states, tend to be richer. But the cor-relation is stronger between prosperity and international trade.
International Exports and States’ Prosperity States’ Inter-state Gross Trade and Prosperity
MHTN
UP
GJKA
WE
RJ
APTE
KE
MP
HR
PUN
BH
OD
CG
JH
10
10.5
11
11.5
12
12.5
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0
Ln
GSD
P P
er C
apit
a
Export to GSDP
correlation=0.70
AP
BH
CG
GJHR
JH
KAKE
MH
MP
OD
PUN
RJ
TETN
UP
WE
10
10.5
11
11.5
12
12.5
10.0 60.0 110.0 160.0 210.0
Ln
GSD
P P
er
Cap
ita
X+M to GSDP
correlation=0.49
4. India’s firm export structure is substantially more egalitarian than in other large countries
Top 1 percent of Indian firms account for 38 percent of exports; in all other countries, they account for a substantially greater share (72, 68, 67, and 55 percent of exports in Brazil, Germany, Mexico, and USA respectively). And this is true for the top 5 percent, 10 percent, and so on.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
Shar
e in
Exp
orts
Percent of Firms
USA India Brazil Mexico Germany
Ten New Facts on The Indian Economy | xv
5. The clothing incentive package boosted exports of readymade garments
The relief from embedded state taxes (ROSL) announced in 2016 boosted exports of ready-made gar-ments (but not others) by about 16 percent.
80
90
100
110
120
130
Jun
-15
Jul-
15
Aug-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Ap
r-16
May
-16
Jun
-16
Jul-
16
Aug-1
6
Sep
-16
Oct
-16
No
v-1
6
Dec
-16
Jan
-17
Feb
-17
Mar
-17
Ap
r-17
May
-17
Jun
-17
Jul-
17
Aug-1
7
Sep
-17
Other Ready-Made Garments
Ready-made Garments: Manmade Fibres
Other Manufactured Goods
Other Labour Intensive
Announcement of
package Notification
Disbursement
6. Indian society exhibits strong son “Meta” Preference
Parents continue to have children until they get the desired number of sons. This kind of fertility-stop-
ping rule leads to skewed sex ratios but in different directions: skewed in favor of males if it is the last
child, but in favor of females if it is not the last (see the top two panels on India). Where there are no
such fertility-stopping rules, ratios remain balanced regardless of whether the child is the last or not (see
bottom panels on Indonesia).
Sex Ratio by Birth when child is not the last (2015-16) Sex Ratio by Birth when child is the last (2015-16)
1.07
0.86 0.85 0.84 0.88
0.80
1.05
1.30
1.55
1.80
1st Ch
ild
2nd C
hild
3rd Ch
ild
4th Ch
ild
5th Ch
ild
India
Ideal SRB=1.05
1.82
1.551.65
1.511.45
0.80
1.05
1.30
1.55
1.80
1st Ch
ild
2nd C
hild
3rd Ch
ild
4th Ch
ild
5th Ch
ildIndia
1.111.02 1.07 1.02
1.08
0.80
1.05
1.30
1.55
1.80
1st Ch
ild
2nd C
hild
3rd Ch
ild
4th Ch
ild
5th Ch
ild
Ideal SRB=1.05
Indonesia
1.13
1.01
1.09
1.03 1.07
0.80
1.05
1.30
1.55
1.80
1st Ch
ild
2nd C
hild
3rd Ch
ild
4th Ch
ild
5th Ch
ild
Indonesia
1.070.87 0.81 0.79 0.81
1.121.00
0.95 0.97 1.00
0.75
0.90
1.05
1.20
1.35
1.50
1.65
1.80
1st Ch
ild
2nd C
hild
3rd Ch
ild
4th Ch
ild
5th Ch
ild
Indian States
Strong Son "Meta" Prefernce StatesWeak Son "Meta" Preference States
Idela SRB = 1.05
1.86
1.59 1.611.52
1.451.44
1.271.20
1.141.07
0.75
0.90
1.05
1.20
1.35
1.50
1.65
1.80
1st Ch
ild
2nd C
hild
3rd Ch
ild
4th Ch
ild
5th Ch
ild
Indian States
Strong Son "Meta" Preference StatesWeak Son "Meta" Preference States
xvi | Economic Survey 2017-18 Volume 1
7. There is substantial avoidable litigation in the tax arena which government action could re-
duce
The tax department’s petition rate is high, even though its success rate in litigation is low and declining (well below 30 percent).
− Only 0.2 percent of cases accounted for 56 percent of the value at stake; whereas
− About 66 percent of pending cases (each less than Rs. 10 lakhs) accounted for only 1.8 percent of the value at stake.
Petition Rate and Success Rate of Tax Department, March 2017
Direct Tax Cases Indirect Tax Cases
Court Success Rate Petition Rate Success Rate Petition Rate
Supreme Court 27% 87% 11% 63%
High Courts 13% 83% 46% 39%
ITAT/CESTAT 27%* 88%* 12% 20%
* Provisional estimates
8. To re-ignite growth, raising investment is more important than raising saving
Cross-country experience shows that growth slowdowns are preceded by investment slowdowns but not necessarily by savings slowdowns may not.
Change in investment and change in growth Change in saving and change in growth
Arg79
Arg88
Arg00
Bol80
Bol01
Bra82Cam80
Cam89
Chl98
Chn88
Col98
Cos82
Cot81Cyp82
Cyp10
Dom90
Dom02
Egy90
Egy11
El 79
Gha06
Gua81
Gua08Hon81
Hon09
Ind13
Idn97
Isr75
Isr84
Isr00
Jam75
Jam07
Jor82
Jor96
Kor97Mad09
Mlw80
Mlw95
Mlw10
Mly84
Mly97
Mal98Mal11
Mau81
Mau95
Mau12
Mex82
Mor84
Moz91
Moz03
Nic77
Pak10
Pan77
Pan83Pan00 Par98
Per83
Per89Per99
Phi83
Sie13
Sin85
Sin99
Sou84
Sou91
Sri84Sri01
Tan95
Tha96
Tun85
Tur98
Uru82
Zim76
Zim96
-15
-10
-5
0
5
Ch
ange
in g
row
th (
T-3
, T
+3)
-12 -10 -8 -6 -4Average change in Investment
Arg79
Arg08
Bol84
Bol13Bra90
Bra93
Cam86
Cam07
Chl97
Chl10
Chn98Col91
Cos83
Cot78
Cot86
Cyp90
Cyp06
Dom84
Gua79Hon81
Hon98Ind11
Idn93Jam75
Jam94
Ken78
Ken94
Kor00
Mlw79
Mly80
Mly08
Mau03
Mex88
Mor93Mor11Pak05
Pan75Pan83
Pan00
Par06
Per84
Per13Phi81
Sin85
Sin99
Sou81
Sou89
Tha98
Tun10
Zim00
-10
-5
0
5
10
Ch
an
ge in
gro
wth
(T
-3, T
+3)
-10 -8 -6 -4 -2Average change in Saving
Ten New Facts on The Indian Economy | xvii
9. Own direct tax collections by Indian states and local governments are significantly lower than those of their counterparts in other federal countries
This share is low relative to the direct taxation powers they actually have.
Direct Tax to Total Revenue: States and Local Government (in percent)
0.0
10.0
20.0
30.0
40.0
50.0
2010 2011 2012 2013 2014 2015 2016
Direct Tax/Total Revenue: States
Brazil Germany India
0.0
5.0
10.0
15.0
20.0
25.0
30.0
2010 2011 2012 2013 2014 2015 2016
Direct Tax/Total Revenue: Local Governments
India ULGs Brazil Germany India RLGs
10. The footprint of climate change is evident and extreme weather adversely impacts agricul-
tural yields
− The impact of weather is felt only with extreme temperature increases and rainfall deficiencies
− This impact is twice as large in unirrigated areas as in irrigated ones
Spatial Distribution of Temperature Changes
(Degrees Celsius change between average of
2005-15 and average of 1950-80)
Impact on Agricultural Yields of Tempera-
ture Changes (Kharif, in percent) according
to Temperature Deciles
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
1 2 3 4 6 7 8 9 10
Unirrigated Areas
Irrigated Areas
Cooler Warmer
Deciles of Temperature Distribution